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New Delhi: Apple Inc could double iPhone production in India to more than $30 billion annually over the next two years if new US President Donald Trump carries out his threat of imposing hefty tariffs on imports from China, said officials and industry experts. Apple currently produces about $15-16 billion worth of iPhones in India annually. Trump had threatened to impose tariffs of 60-100% on goods imported from China during his campaign.
In his first term, Trump had imposed an array of tariffs on Chinese imports. A similar playbook in his second tenure could see Apple become one of the top manufacturing companies in India, said officials. Trump’s return is likely to influence Indo-US relationship including strategic and defence ties, experts said.
Trade ties will also get impacted in varying degrees. Advt “While India could lose in some areas, it could be a big beneficiary in areas such as electronics, especially iPhone production,” an official said requesting anonymity. In his first term, Trump had imposed tariffs as much as 25% on Chinese goods.
Experts believe that if Trump carries out the tariff threats against Chinese exports to the US, Apple could look at shifting an additional large volume of iPhone production to India. The fresh capacity will create 200,000 jobs and lift India’s contribution in the iPhone production ecosystem to more than 26% in next few years from 12-14%. Apple did not respond to ET’s queries.
“With growing premiumisation trends and demand for expensive iPhones globally, supported by iPhone Pro series now being manufactured in India, the overall production value in India has the potential to go well beyond $30 billion a year in the coming couple of years,” said Neil Shah, vice president at technology researcher Counterpoint Research. Experts, however, pointed out that much of the shift in iPhone manufacturing would hinge on Trump’s actions after he officially takes charge as the US President. It would also depend on whether the Indian government can make deep reforms to address continued cost inefficiencies and policy uncertainties due to taxes and tariffs to ensure that the additional production does not shift from China to other countries like Vietnam.
Advt Apple sold iPhones worth $201 billion in its financial year ended September 30, comprising 51% of its total revenue of $391 billion. While the company shifted 12-14% of iPhone production to India in the last three years after the Indian government’s smartphone production linked incentive (PLI) scheme, more than 85% of iPhones are still made in China. Apple, which tapped India as its second iPhone manufacturing base globally, is fast expanding capacity in the South Asian country, also the world's second largest smartphone market.
The company currently contracts three companies—Foxconn, Pegatron and Tata Electronics (previously Wistron)—to make produce iPhones in India. Nearly 70% of the local production is exported to various countries, including the US. TheTata Group is setting up a second iPhone facility in Hosur, Tamil Nadu, which would have up to 40,000 employees.
The plant is expected to go live in the next few months. Officials expect the US government to impose tariffs on Chinese exports within a year, which means Apple has around 12 months to expand its production facilities in India. But experts noted that any such move may not be easy since India has never experienced such a high level of production in any product, that too for exports.
However, the Indian government appears optimistic about the potential electronics manufacturing opportunity. Foreign minister S Jaishankar, at a recent press briefing, has said: “..
.we in India perceive it as an opportunity because having kind of missed the manufacturing bus in the 1990s, early 2000s..
. we do think that this reordering of supply chain gives us a sort of second bite of the apple. And maybe this time around, starting with Apple, we are doing better than we were doing earlier.
” By Kiran Rathee , ET Bureau Published On Nov 11, 2024 at 07:52 AM IST Telegram Facebook Copy Link Be the first one to comment. Comment Now COMMENTS Comment Now Read Comment (1) All Comments By commenting, you agree to the Prohibited Content Policy Post By commenting, you agree to the Prohibited Content Policy Post Find this Comment Offensive? Choose your reason below and click on the submit button. This will alert our moderators to take actions REASONS FOR REPORTING Foul Language Defamatory Inciting hatred against a certain community Out of Context / Spam Others Report Join the community of 2M+ industry professionals Subscribe to our newsletter to get latest insights & analysis.
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